Social Security Reforms in Heterogeneous Ageing Populations is a stand-alone research project (17647) funded by the Anniversary fund (Jubiläumsfonds) of the Austrian National Bank (OENB – Österreichische Nationalbank) from 2018 to 2020. The project is conducted at the Institute of Statistics and Mathematical Methods in Economics at TU Wien.

To sustain our current system of reallocation of resources across ages, reforms of our social security systems are inevitable. Such reforms need to take into account that individual ageing is heterogeneous across socioeconomic groups. Ignoring these heterogeneities might jeopardize any reform as we ignore inequalities in the length of life and income across and within generations for the sake of increasing sustainability of public finances.

The aim of the project is to first develop theoretical models that explain the observed trends in health and life expectancy by socioeconomic status. In a second step we introduce heterogeneous ageing populations —as developed in the first step— into computable general equilibrium economic models that also account for social security systems. The model is applied to Austria and other selected European countries. Within this framework we study (a) to which extent different socioeconomic groups will benefit or alternatively lose depending on the specific social security system in place and (b) which policy reforms are required that guarantee the sustainability of the social security system and income growth without increasing income inequality and differences in length of life within generations.